Thursday 2 November 2006 03.29 EST
First published on Thursday 2 November 2006 03.29 EST

The following correction was printed in the Guardian's Corrections and clarifications column, Monday November 13 2006

We said in the article below that the Irish prime minister, Bertie Ahern, supported an all-Ireland corporation tax rate of 17%. The rate brought in by his government is 12.5% and he favours an all-Ireland rate at the same level.

Gordon Brown yesterday held out the prospect of a £50bn aid package for Northern Ireland over the next 10 years so long as the political parties agree to sign up to a power-sharing executive by the government deadline of November 24.

The chancellor made the conditional peace dividend offer at a meeting with the Northern Ireland parties in London amid signs that the Democratic Unionists and Sinn Féin are stalling on an agreement.

Mr Brown met the main leaders of the parties, as well as the Northern Ireland assembly's economic sub-committee.

The Treasury said the government was also willing to commit itself to at least £35bn of funding for the executive over the next four years. The Treasury said it was offering the substantial funding rise at a time when other departments are likely to suffer in the spending review.

The political parties had also been seeking cuts in corporation tax to bring Northern Ireland into line with the south, at least for 10 years. The cut would mean corporation tax would fall from 30% to 12.5%. Ian Paisley's Democratic Unionists want to see it cut to 10% in Northern Ireland while Sinn Féin wants an all-island rate of 17%, a position supported by Bertie Ahern, the Irish prime minister.

Mr Brown argues it would be illegal under EU law for one part of the UK to have a different level of corporation tax to another. If he agreed that Northern Ireland could be classified as a special division of the UK economy, Scottish Nationalists would demand the same for Scotland.

The political parties have until November 10 to decide whether to sign up to the St Andrews agreement. Both Sinn Féin and the DUP are holding internal consultations. Sinn Féin insists it is not yet ready to pledge to support the Police Service of Northern Ireland, the courts and the rule of law. The DUP has said it will not share power with Sinn Féin unless there is clear support for policing and the rule of law.

In the Commons, Tony Blair condemned a spate of incendiary attacks in Belfast believed to be the responsibility of dissident republicans. Mr Blair has said he will close the assembly on November 24 if there is no power sharing agreement by then.

The aid package involves a four-year spending commitment rising in successive stages from £8bn a year today to £9.2bn a year in 2010-11, a total commitment of £35bn, including capital spending.

It also proposes a strategic capital investment plan totalling £18bn over the period 2005 to 2017 to underpin long-term economic growth and facilitate capital spending on roads, health and schools.

Mr Brown, accompanied by the Northern Ireland secretary, Peter Hain, also promised to allow the executive to retain receipts from planned public sector asset sales estimated at over £1bn between 2007-08 and 2010-11 to boost capital investment.